Bundle: Accounting, 27th + Working Papers, Chapters 1-17
27th Edition
ISBN: 9781337759892
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 24, Problem 24.6APR
(1)
To determine
Transfer price: The price charged for the goods and services transferred among the divisions is referred to as transfer price.
Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
To indicate: If the market price be the appropriate transfer price for Company G
(2)
To determine
The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing
(3)
To determine
To prepare: The income statements for CR and CL Divisions of Company G for the year ended December 31, 20Y8
(4)
To determine
The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing
(5) (a)
To determine
The range of transfer price, if negotiated price approach is used
(b)
To determine
To suggest: The transfer price
Expert Solution & Answer
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Transfer Pricing
Exoplex Industries Inc. is a diversified aerospace company, including two operating divisions, Semiconductors and Navigational Systems. Condensed divisional income statements, which involve no intracompany transfers and include a breakdown of expenses into variable and fixed components, are as follows:
Exoplex Industries Inc.Divisional Income StatementsFor the Year Ended December 31, 20Y8
SemiconductorsDivision
NavigationalSystemsDivision
Total
Sales:
2,240 units × $396 per unit
$887,040
$887,040
3,675 units × $590 per unit
$2,168,250
2,168,250
Total sales
$887,040
$2,168,250
$3,055,290
Expenses:
Variable:
2,240 units × $232 per unit
$519,680
$519,680
3,675 units × $472* per unit
$1,734,600
1,734,600
Fixed
220,000
325,000
545,000
Total expenses
$739,680
$2,059,600
$2,799,280
Income from operations
$147,360
$108,650
$256,010…
Transfer pricing
Garcon Inc. manufactures electronic products, with two operating divisions, Consumer and Commercial. Condensed divisional income statements, which involve no intracompany transfers and which include a breakdown of expenses into variable and fixed components, are as follows:
Garcon Inc.Divisional Income StatementsFor the Year Ended December 31, 20Y2
ConsumerDivision
Commercial Division
Total
Sales:
14,400 units × $144 per unit
$2,073,600
$2,073,600
21,600 units × $275 per unit
$5,940,000
5,940,000
Total sales
$2,073,600
$5,940,000
$8,013,600
Expenses:
Variable:
14,400 units × $104 per unit
$(1,497,600)
$(1,497,600)
21,600 units × $193* per unit
$(4,168,800)
(4,168,800)
Fixed
(200,000)
(520,000)
(720,000)
Total expenses
$(1,697,600)…
The following data is for a company that produces a single product.
selling price
24
193
Units in beginning inventory
Units produced
Units sold
3,090
2,910
variable costs per unit:
Direct materials
53
Direct labor
$
24
59
Variable manufacturing overhead
variable selling and administrative expense
Fixed costs:
15
13
Fixed manufacturing overhead
Fixed selling and administrative
$ 89,610
$ $,730
Requlred:
a. What Is the unit product cost for the month under varlable costing?
b. What is the unit product cost for the month under absorption costing?
c. Prepare a contribution format income statement for the month using varlable costing.
d. Prepare an Income statement for the month using absorption costing.
e. Reconcile the varlable costing and absorption costing net operating incomes for the month.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Required C
Required D
Required E
Reconcile the variable costing and absorption costing net operating incomes…
Chapter 24 Solutions
Bundle: Accounting, 27th + Working Papers, Chapters 1-17
Ch. 24 - Differentiate between centralized and...Ch. 24 - Differentiate between a profit center and an...Ch. 24 - Prob. 3DQCh. 24 - What is the major shortcoming of using income from...Ch. 24 - In a decentralized company in which the divisions...Ch. 24 - How does using the return on investment facilitate...Ch. 24 - Why would a firm use a balanced scorecard in...Ch. 24 - What is the objective of transfer pricing?Ch. 24 - When is the negotiated price approach preferred...Ch. 24 - When using the negotiated price approach to...
Ch. 24 - Budgetary performance for cost center Caroline...Ch. 24 - Budgetary performance for cost center Conley...Ch. 24 - Service department charges The centralized...Ch. 24 - Service department charges The centralized...Ch. 24 - Prob. 24.3APECh. 24 - Income from operations for profit center Using the...Ch. 24 - Profit margin, investment turnover, and ROI Cash...Ch. 24 - Profit margin, investment turnover and ROI Briggs...Ch. 24 - Residual income The Consumer Division of Galena...Ch. 24 - Residual income The Commercial Division of Herring...Ch. 24 - Transfer pricing The materials used by the North...Ch. 24 - Transfer pricing The materials used by the...Ch. 24 - Budget performance reports for cost centers...Ch. 24 - Divisional income statements The following data...Ch. 24 - Prob. 24.3EXCh. 24 - Prob. 24.4EXCh. 24 - Service department charges In divisional income...Ch. 24 - Service department charges and activity bases...Ch. 24 - Divisional income statements with service...Ch. 24 - Corrections to service department charges for a...Ch. 24 - Profit center responsibility reporting Glades...Ch. 24 - Return on investment The income from operations...Ch. 24 - Residual income Based on the data in Exercise...Ch. 24 - Determining missing items in return computation...Ch. 24 - Profit margin, investment turnover, and return on...Ch. 24 - Prob. 24.14EXCh. 24 - Determining missing items in return and residual...Ch. 24 - Determining missing items from computations Data...Ch. 24 - Prob. 24.17EXCh. 24 - Balanced scorecard for a service company American...Ch. 24 - Building a balanced scorecard Hit-n-Kun Inc. owns...Ch. 24 - Prob. 24.20EXCh. 24 - Prob. 24.21EXCh. 24 - Budget performance report for a cost center...Ch. 24 - Profit center responsibility reporting for a...Ch. 24 - Divisional income statements and return on...Ch. 24 - Effect of proposals on divisional performance A...Ch. 24 - Divisional performance analysis and evaluation The...Ch. 24 - Prob. 24.6APRCh. 24 - Budget performance report for a cost center The...Ch. 24 - Profit center responsibility reporting for a...Ch. 24 - Divisional income statements and return on...Ch. 24 - Effect of proposals on divisional performance A...Ch. 24 - Divisional performance analysis and evaluation The...Ch. 24 - Prob. 24.6BPRCh. 24 - Prob. 24.1CPCh. 24 - Prob. 24.3CPCh. 24 - Prob. 24.4CPCh. 24 - Evaluating divisional performance The three...Ch. 24 - Evaluating division performance Last Resort...
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